‘Power Deficit Could Stunt Growth’


By Petronella Sibeene WINDHOEK NAMIBIA will not develop further if its power supply is not boosted to meet the current and possible future high demands. The present scenario shows that power demand in the country has grown in the past few years and yet the generation capacity still remains low. In an interview, Managing Director of NamPower Dr Leake Hangala said the country’s power generation plants cannot meet the demand for power without importing from neighbouring countries. Over the past few years, Namibia has experienced growth in power demand of between three and five percent. With power consumption presently standing at 400 megawatts, Namibia can only generate 240 megawatts from the Ruacana Hydro Power Station, while sourcing the other 120 megawatts from the Van Eck Thermal plant in Windhoek. Another 24 megawatts is sourced from the diesel-powered Paratus plant in Walvis Bay, while the remaining 16 megawatts is imported. According to Hangala, though the demand for power has grown, the power utility in collaboration with the Namibian Government are working on supplementing power in the years to come. This is being done through the development of the Kudu Gas Project. Several studies have so far been conducted and projections are that if the anticipated favourable investment conditions are taken in 2006, the first megawatts should flow from Kudu by 2010. Built at a cost of N$4 billion, the Kudu project would generate around 800 megawatts. Another way to secure the power supply in the country would be through the prospective development of a 200-400 megawatts transmission interconnection between Namibia and Zambia, an electricity network termed the Caprivi Link. The estimated N$1.5-billion project with its projected commissioning date of 2008 would enable the country to import power in strategic quantities. According to NamPower’s annual report 2005, the project would diversify Namibia’s options and decrease its current disproportionate dependency on a single neighbour South Africa. Additionally, NamPower with neighbour Angola proposes to study the Baynes Site in the lower Kunene River with the aim of investigating the site’s development as a mid-merit peaking power station. As every service rendered calls for a price, the MD says power in Namibia is an affordable commodity compared to other Southern African countries. “Electricity prices should not be expected to be the same at all times. A rise in fuel and other things would unfortunately be reflected in power tariffs. However, that would be done considerably,” noted Hangala. Despite NamPower having municipalities, Governmental agencies and the commercial sector as its main customers, in the past few years the country has witnessed the introduction of the “go-between” in supplying power; the Regional Electricity Distributors (REDs) companies. The first of such companies is NORED that has been in operation since 2002. The inclusion of such companies in the distribution of power according to Nampower’s managing director should not be considered to have brought any changes with regard to the purchasing price of power services or the quality of power supplied. Nampower as the main supplier has among other things conducted an extensive customer data verification exercise, the formulation of power purchase agreements and service level agreements on billing, network maintenance for the REDs. With REDs, Nampower would continue making strides in rural electrification. The quality of power in the country manifests itself in the company’s international recognition in its quality service delivery. Last week, the power supplier was classified as investment grade for both national and foreign currency ratings by an international institution Fitch. This rating means the company is well run by national, regional and international standards and therefore makes it a preferred institution by financial institutions to lend or invest. It is the only company in Namibia to have an international rating and the second power utility in Southern Africa after Eskom. Under the rural electrification project, the company has taken electricity to 40 percent of rural areas in the country. The annual report also reveals that during the financial year Nampower contributed approximately N$52 million to rural and commercial electrification three-Maize Triangle projects that started in 2002, whose aim is to electrify farmlands. Under these projects, a total of 175 farms were connected to the grid. As one of the biggest parastatals in the country, Nampower has an annual turnover of N$1.01 billion and this year paid dividends of N$5 million out of its profits. The company employs 840 people. Apart from that, Hangala says the company has largely supported initiatives aimed at educating the young Namibian people as the country heads towards Vision 2030. Every year, the company offers scholarships to 20 young Namibians who wish to study in the fields of engineering, law and others. The managing director describes the year 2005 as challenging. “We have been preoccupied with restructuring the power system involving REDs, preparations of the transmission network. It’s been a challenging year but we have made it through,” he said. Hangala’s contract expires on December 31, 2005. Looking back at the Nam-power of 10 years ago, he said the company was male dominated but has now been broadened to fit the Namibian profile. “When I started, Nampower was worth N$2.7 billion but now it is worth N$7 billion. Nampower had cash of N$600 million but now it has N$1.5 billion. When I started, there were hardly scholarships, there was no rural electrification, Swawek could hardly pay dividends. I brought in procurement systems, transparency, and BEB policy,” he said.